People get in and out of Lyft and Uber cars outside the Cal Train station on Townsend Street in San Francisco, California, on Monday, May 20, 2019. Both Uber and Lyft have agreed to a 3.25%-per ride tax in an effort to avoid a tax on their gross receipts. The taxes will generate an estimated $30 million to $35 million for transportation improvements and street-safety upgrades.
San Francisco officials have struggled for years with the city’s congestion problems. One small way to ease some gridlock? Tax ride-hailing services such as Uber and Lyft, which contribute to traffic, to help pay for better public transit and street safety.
That’s the rationale for Proposition D, the “Traffic Congestion Mitigation Tax,” supported by both major ride-hailing companies, which would tax every Uber and Lyft ride that starts in San Francisco.
The revenue would help boost Muni as well as finance some bicycle and pedestrian safety improvements. The city estimates that Prop. D would bring in $30 million to $35 million a year — a modest addition to Muni’s $1.2 billion two-year operating budget for 2019 and 2020.
“It’s long past time that Uber and Lyft be part of the transportation solution in San Francisco and pay for mitigating the impacts that they’ve had on every street in our city,” said Supervisor Aaron Peskin, who crafted the proposal.
The tax’s backers, who represent the city’s entire political establishment, point to a study that said two-thirds of the city’s increased congestion over six years was caused by ride-hailing.
The tax would be 3.25% on most rides, and 1.5% on shared rides. The lower rate also would apply to electric cars until the end of 2024.
In other words, a $10 regular ride would incur a tax of 32.5 cents; a $10 shared or electric ride would be taxed 15 cents. No tax would be paid on tolls, airport fees and tips to drivers, nor on a portion of a ride outside San Francisco.
The tax would be in effect from 2020 through 2045 and would apply to self-driving cars if the companies started using them for paid rides. It would not apply to taxicabs or private cars.
Prop. D proceeds would be split between the San Francisco County Transportation Authority, which would direct them to making streets safer for pedestrians and bicyclists through measures such as widening sidewalks and adding bike lanes, and the San Francisco Municipal Transportation Agency, which would use them to improve Muni, by buying more buses and trains and hiring more drivers, for example.
Lyft is a major backer of Prop. D, which would tax ride-hailing trips that start in San Francisco.
Peskin got buy-in from both companies because Prop. D is less onerous than an earlier idea: a tax on ride-hailing companies’ gross receipts at rates up to 0.975%. Getting Prop. D on the ballot in San Francisco required the Legislature to pass a bill last year giving the city the authority to tax Uber and Lyft.
Uber has contributed $450,000 to the Prop. D campaign, and Lyft has put in $200,000. Lyft didn’t answer questions about whether it would contribute more to bring it closer to parity with Uber.
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Mayor London Breed, the entire Board of Supervisors, and organizations such as the Chamber of Commerce, SF Bicycle Coalition, Transit Riders, Walk SF and the SF Labor Council all support Prop. D.
The San Francisco Republican Party opposes the tax, arguing that the city shouldn’t pick winners and losers in the transportation arena. The San Francisco Taxi Workers Alliance is also against the measure, which it says will do little to reduce the number of Uber and Lyft cars on the streets; as is the Libertarian Party, which says it could encourage people to drive their own cars instead of using ride-hailing services.
Despite all the heavyweight support, Prop. D is not a sure thing. Because the money is dedicated to specific purposes, the tax must be approved by two-thirds of voters to pass.
“Traffic congestion is such a big issue that my take is that it should pass, but two-thirds is a pretty big hill to climb,” said Jim Ross, a political consultant in Oakland, who’s not involved in the campaign.
Probolsky Research, a nonpartisan independent research firm, polled 400 San Francisco voters in late September via phone and online. It found that 47% support Prop. D, 34.8% oppose it and 17.3% are undecided.
“A month out, it’s a steep hurdle (to add enough support to pass), but I think it’s doable,” said Adam Probolsky, president of the firm.
Maggie Muir, who’s running the campaign for Prop. D, dismissed that poll as too narrow and too early, taking place before most voters had learned about the measure.
The campaign’s own polling showed overwhelming support for the measure’s proposed benefits, she said, with more than 80% of respondents saying they’d be more likely to support the measure when they heard about specific improvements it could fund such as providing more Muni buses and trains, repairing roads, improving pedestrian safety, reducing congestion and improving transit for people with disabilities. The poll was conducted via both phone and online among 500 likely November voters.
“Voters are tired of the constant congestion and are ready to support this measure when they learn about the improvements it will bring to Muni service and pedestrian safety,” she said.
The fact that Uber and Lyft back the initiative may turn off some voters, said Jon Golinger, an election-law professor at Golden Gate University.
“Voters tend to be skeptical about what the agenda is when a company is paying for a ballot measure,” he said. “People want to know what the real impact on them will be.”
Uber and Lyft haven’t said whether they would pay the tax themselves or add it to riders’ bills. Both companies are newly public and have taken a beating on Wall Street for their deep unprofitability.
“It is likely that the great majority of the tax will be passed on to consumers,” said an economic impact report by Ted Egan, San Francisco chief economist about Prop. D. That report said the tax might cause the loss of 190 jobs over 20 years.
Carolyn Said is a San Francisco Chronicle staff writer. Email: email@example.com Twitter: @csaid